Average house prices in the UK are now starting to recover and we expect this gradual upward trend to continue over the next few years. In cash terms, house prices could rise above their previous 2007 peak by the end of 2014, although this may take until 2021 in real terms (adjusting for consumer price inflation).
Across the UK there continues to be significant regional variations in house price trends. London and Northern Ireland are the main outliers while the rest of the UK has witnessed broadly similar house price trends on average since 1997.
While the value and number of mortgage approvals have risen slightly over the last couple of years, they remain a long way below 2007 peak levels. The recently announced Help to Buy scheme seems to be having a positive impact in the market in the short term. But, in the longer term other measures are likely to be needed to address more fundamental problems related to lack of housing supply and affordability for first time buyers.